CHARLOTTE, N.C. (June 19, 2014) — TPG Capital L.P., the owner of American Tire Distributors Inc., will continue to be a shareholder of the company after the initial public offering (IPO) proposed by ATD Corp., according to the company’s June 16 filing with the U.S. Securities and Exchange Commission (SEC).
TPG — which paid approximately $1.3 billion through affiliates for ATD in June 2010 — will continue to have “significant influence over us and decisions made by stockholders and may have interests that differ from yours,” ATD said in the filing. This could limit the ability of new shareholders “to influence the outcome of matters submitted to stockholders for vote.”
TPG ultimately will determine how much of ATD’s stock it chooses to hold, although that could be influenced by the underwriters’ option to purchase additional shares.
“As a result,” ATD said, “we expect to be a ‘controlled company’ within the meaning of the corporate governance standards.…”
TPG’s purchase of ATD in 2010 trumped an IPO that ATD had been planning at the time. TPG bought ATD from affiliates of Investcorp Bank BSC, Berkshire Partners L.L.C. and Greenbriar Equity Group L.L.C., which paid about $500 million for the company.
ATD said it expects to use the net proceeds from the offering primarily to repay a portion of its existing long-term debt. ATD has yet to determine the number of shares, pricing, etc.
The distributor has designated BofA Merrill Lynch, Deutsche Bank Securities and Goldman, Sachs & Co. as joint book-running managers and as representatives of the underwriters for the offering. In addition, Barclays, J.P. Morgan and UBS Investment Bank are joint book-running managers for the offering.
ATD is acknowledged to be the largest distributor of replacement tires in North America, with $3.84 billion in sales last year. However, the Charlotte-based firm reported a net loss of $6.33 million.
ATD claims an estimated U.S. replacement market share of 14 percent and an 18-percent share of the Canadian passenger and light truck tire replacement market, distributing tires, wheels and other parts to 80,000 customers in the two countries through more than 140 distribution centers. That scale of business equates to 40 million ties distributed, ATD said.
The IPO filing is in addition to a May 16 “Notice of Full Redemption” filing by American Tire Distributors Inc. providing for the redemption of all $250 million aggregate principal amount of its 9.75-percent senior secured notes on June 16.
ATD redeemed the notes at a price equal to 104.875 percent of the principal amount of the notes plus accrued and unpaid interest, or a total of $263.2 million.
At the same time, ATD amended a $300 million term loan it had secured in connection with its acquisition of Terry’s Tire Town Holdings Inc. in March, exercising options to secure up to $420 million more at the same terms as originally negotiated. ATD used this credit line to pay off the senior secured notes.
How stiff is the competition from car dealers selling tires in your area of operation?
|Not stiff at all, it's negligible||
21% (20 votes)
|Pretty intense but I'm holding my own and haven’t lost many sales||
26% (24 votes)
|It's moderately competitive but I’ll always beat their deals||
22% (21 votes)
|I've adjusted how I approach tire sales and it seems to be working to my benefit||
15% (14 votes)
|I'm ready to give up and look for another line of work||
16% (15 votes)
|Total votes: 94|